A Marketing Story On IKEA – One Of The Most Popular Furniture Businesses In The World

Did you know that the E in IKEA stands for the name of a farm, Elmtaryd, the name of the farm where Ingvar Kamprad (IK) grew up in Agunnaryd (A) his home-town? These facts may be insignificant but what is noteworthy is how IKEA has managed to stay ahead in the furniture business since 1943. For starters, IKEA doesn’t start with a competitive white Space or consumer trends. IKEA starts with the Price-Point. IKEA thus operates on a cost leadership strategy for sustained competitive advantage

The Consumer Research for IKEA goes beyond consumption patterns and Ikea believes in uncovering the lifestyle patterns of consumers as this will ultimately decide the design and development of furniture at Ikea

Ikea uses a unique form of Ethnographic studies to understand Consumer buying behaviour. IKEA publishes a quarterly “Life at Home” report which is collected after spending considerable time with people and understanding their daily lifestyle. One of the statistics in such a report is that 51 percent of New-Yorkers wake up before 7 A.M. Now one may wonder how this is relevant to a furniture retailer, but the sleep-patterns of the consumer will help design the furniture, one such thought flow could be “If I sleep lesser than most people do I want to buy a bed which would double up as a couch?”.

IKEA believes in a Marketing Strategy which is efficient and effective. Other competitive furniture retailers rely on designs from Top designers, IKEA, on the other hand, relies on the product rather than the person. Designers several times act as Influencers in retail as consumers want to associate with products that are

Any product can be viewed as three-layered onion, the innermost layer being the core product, In case of an airline, travel is the core product, and the second layer is the facilitating service which is nothing but the service which aids in the delivery of the core-product and which is essential, the third and the layer which Ikea has mastered is the augmenting layer which creates differentiation.

In IKEA’s case the core product is the benefit that the furniture offers, note that it is the benefit and not the furniture itself, for instance, furniture for someone could offer comfort, while for someone else it may be a matter of pride, the core product is the want which satisfies the need of the customer.

The facilitating service is essential without which the core-product cannot be met. In the case of IKEA, the instructions for the DIY furniture and the billing counters are an example of the facilitating service.

The Augmented service is the Key Differentiator in IKEA which is providing of facilities like Pram, restaurant services etc. Now what do these services have anything to do with furniture, the answer is they have something to do with the people who buy this furniture, it takes away a few of their worries, but how can a low-cost retailer afford to provide such services, the secret is IKEA withholds some aspects of the core service, for example IKEA doesn’t assemble the furniture, there is no intervention by salespersons unless required.

IKEA is a leader in understanding the elements that matter to a consumer and de-constructing them, it has thus stood the test of time and is attractive in today’s dynamic market environment.

Competitive White Space

Competitive White Space is similar to Points of Differentiation in a Perceptual Map. Basically, it is a space for a company to manoeuvre in a crowded playing field.